As news breaks that Onecoin’s much anticipated Macau event is getting shut down by Chinese authorities, the beleaguered company has gone on the offensive by initiating legal action against a number of bloggers, developers and even some of their own former affiliates.
Bjorn Bjercke, the Norwegian blockchain specialist that Onecoin attempted to hire just days before the launch of the ‘new’ Onecoin blockchain in 2016, received a legal notice from Norwegian law firm Danielsen & Co. The letter stated that Bjercke had made “untrue and harmful” statements to the media. It added that he would be held “liable for the economic loss” resulting from statements where he labeled Onecoin leaders as criminals.
It is a bold move by Onecoin, but not entirely unexpected. Josh Garza of GAW Miners and Paycoin made similar moves as the tide of media investigation turned against him. Similarly, other companies involved in deceiving investors prefer to make use of court systems to control the narrative as their schemes come under increasing pressure.
Is Onecoin Facing Legal Problems of Its Own?
Considering Ruja Ignatova may actually be on probation in Germany (the term began in April 2016) she may have been better served by hiring a PR firm. In German law a sentence under two years may be turned into a period of probation, subject to the crime and the judgement of the court as to whether the defendant is likely to reoffend. As the holder of a German passport, if Ignatova breached her probation by reoffending, she may be forced back before the courts.
More pressing for the company however, is the latest news out of China. German website The Gerlach Report published a piece titled “Onecoin: Macau police want to arrest leadership”. The article quotes Commissioner-General Ma Io Kun as saying the police have developed a “broad-based plan for the seizure of the OneCoin fraudsters”. The chances of Ignatova or other senior Onecoin leaders entering China for the Macau event seem slim.
Despite this, over the last week the Onecoin leadership has shown they intend to attack anyone who speaks out against them, resorting to intimidating legal tactics by demanding that Bjercke prepare to negotiate the size of a compensation settlement, along with taking down the Bitsonline article of April 17. Furthermore, the legal notice asks that Bjorn express contrition for his actions.
“We request that the article published on bitsonline.com is retracted…..[and] that you confirm that you unconditionally [regret] and denounce your claim as mentioned publicly”
Developer Remains Defiant
Noting the company’s intent to seek damages for the statements Bjercke made in relation to his Onecoin dealings, Bjorn has been in contact with Norwegian police. Having already dealt with multiple police in different jurisdictions, he felt the need to inform them of the demands made by Onecoin through Danielson & Co lawyers.
From his meetings Bjercke has been buoyed by the support of the Norweigen police: “They are backing me 100%. I am absolutely in the clear to call Onecoin criminals, or worse than criminals, which they are.”
While Bitsonline is not able to publish all the facts due to jurisdictional issues and ongoing investigations, Bjorn stated that the police “have verified information that I am not at liberty to discuss.” He intends to face the Onecoin challenge front on.
Per Danielsen wrote in his letter that if one party “disputes a notified claim [they are] also required to provide information”, something that Bjercke says he would gladly provide to the courts. As such, Bjorn has engaged his own lawyers and plans to counter-sue Onecoin Ltd for defamation, “I cannot give up. I cannot hide the truth. I cannot stay quiet about Onecoin being a scam”. This is an expensive process but one that will enable him to table all facts that cannot presently be disclosed.
German News Site Claims Underworld Connections
As investigations are ongoing, Bjercke refuses to confirm or deny whether the information relates to the recent BaFin statement calling Onecoin “one of the most dangerous money games of recent years” or the alleged links to organized crime and powerful Bulgarian public figures.
However The Gerlach Report also claimed Onecoin is a “collaboration between the Bulgarian and Russian mafia”. The claim seems to be unsubstantiated, however the links seem at least worthy of further investigation according to an English translation of Nickolay Stoyanov’s article for Bulgarian news site Capital.
But it is another article from The Gerlach Report that showcase more targeted threats coming from Onecoin. “Anti Mafia unit hunts for Onecoin cheats” details unconfirmed reports that the Steinkeller brothers, Christian and Stefan, have allegedly threatened to murder people who have come out with information from within their own hometown. In Bolzano, the Italian area where the Steinkellers hail from, the Direzione Investigativa Antimafia, apparently are investigating however “the problem is that people are afraid to open their mouths and deliver the criminals to justice.”
Similarly, in Germany itself, leading Onecoin investor Kevin Schutz recently threatened the Chief Editor of The Gerlach Report via email, writing “your wife and mother will be taken care of before your eyes. I know everything about you.”
Onecoin Claims No Investment Activity
While these may or may not be empty threats, Jen McAdam, a former Onecoin IMA, knows about receiving abuse first hand — pornographic pictures and personal insults — in her chat support group. She has also received a similar notice to Bjorn Bjercke for conducting webinars about the wrongdoings of Onecoin.
Through the London law firm Carter-Ruck, Onecoin has accused McAdam of defamation and has asked her to take down YouTube recordings of her webinars. Although worried by the notice, she was amazed at the insinuations put forward and declared she did not post the recordings as Onecoin claimed.
Interestingly, the Carter-Ruck letter makes reference to bitcoin as “a competitor cryptocurrency”, despite the onelife.eu website stating that “Onecoin is not a Bitcoin alternative”. In an internal memo obtained by Bitsonline, Onecoin goes to great lengths to highlight that the company exists only to sell “educational products” that are “not related in any way to any investment programs and / or sale of financial products therefore there is not any investment activity”. However, a cryptocurrency that competes with bitcoin surely indicates investment activity, as does the fact that Onecoin offers “Coinsafe”, where an additional 12% interest is earned, similar to a bank account.
Actions and Statements Appear to Differ
Bjercke also received an anonymous copy of a German Onecoin document written in response to Germany’s BaFin order for Onecoin to “Cease and Desist” all business operations in Germany: “As a purely precautionary measure … free tokens will no longer be provided with the Onelife educational packages in Germany until further clarification”. Ironically, the document then goes on to defend itself by saying that “Our business practices are not concerned with selling Onecoins … there has not been any trade of Onecoins performed by our company.”
This goes against mountains of evidence that exist online showing Ruja Ignatova and other Onecoin leaders talking about the value and potential of Onecoins. A cached version of onecoinonelifefacts.blogspot quoted the vision of the onelife.eu website as “provid[ing] alternative payment solutions” and to make “financial transactions and trade safer, easier”. They have also claimed Onecoin is “the Bitcoin Killer”, will “bank the unbanked”, and presented a simulative ‘blockchain’ as the real thing. It has proved an effective sales pitch the world over.
The events in Germany may also explain what Tim Tayshun reports happening to all Onecoin IMA’s accounts. Tim has been working to expose Onecoin for longer than anyone else and recently noted that “All transactions in every IMA’s account which are over 30 days old [have] been deleted. All 3 million accounts.”
The sale of “educational products” may turn out to be the legal avenue that Onecoin attempts to take in order to sidestep the mounting legality issues.
To Jen McAdam and many others who purchased the supposed “education”, the difference between the words and reality is laughable. McAdam says when she bought into Onecoin it was “all focused on how many tokens, how many coins received after mining and the current Onecoin value of that package once coins were mined”. This is an experience echoed by other users in McAdam’s support group. Member ’Danzic’ recalls that being pitched on tokens “You get so many splits, I get so many Onecoins and after some time the value will go up”.
Norwegian financial journalist Steinra Grini tells the same story. After approaching Onecoin leaders at a promotional event, she was not informed about any kind of education, rather:
While claiming to be the new BitCoin, they instead concentrated on selling so-called “Tokens”… which multiply themselves with express speed when they frequently split, which means that the number of tokens doubles (company-wide) without a drop in value.
Promotion Strategy Shifted
But McAdam did notice a change in tact around September 2016 when instructions from the Onecoin compliance team dictated that affiliates needed to begin using the term “educational packages” in their promotions. To her, everything about this focus on education seemed odd. She noted “there was never any training” regarding the financial education content.
This is not to say the financial content was of a high quality; such was the basic level of financial information, team members began referring to the content disparagingly as “Mickey Mouse education”. When one of her team members asked Jen’s sponsor where the “real education” was and what were the plans going forward, the sponsor became angry and left the chat.
This then begs the question – if the value is in the content and not the tokens why do the lowest level packages seem to contain the same content as the highest level? This would suggest that the incentive to purchase a higher level must stem from something other than the content. The obvious answer was given by one of Jen’s support group members, ‘Eileen’ who succinctly noted the real incentive to invest in Onecoin: “the bigger the package you bought the more coins you got in return.”
One Blogger Backs Down
For now though, the free tokens have been suspended and Bjorn and Jen plan their next moves. Unfortunately they are not the only ones having to deal with the threat of legal action.
German Bitcoin blogger ‘Coinspondent’ received multiple letters regarding his reporting on Onecoin, along with his web hosting company. A reddit post by u/sagesex outlines the situation the blogger faces: in Germany an individual can be issued with ‘Abmahnungen’, which is a “written warning in German law that demands … the recipient to sign a declaration that he will abstain from something and also to pay a large lawyer fee, in order to avoid being sued.”
Accordingly he has taken the article down, which is understandable for the blogger as he is facing a company with millions of dollars at its disposal.
The seems like a textbook bully play, trying to intimidate a much smaller party into submission.
The tactic can work to scare people off as the potential cost and hassle may not be worth the end result, but conversely it can also mean further publicity. In this case, the crypto community has been increasingly galvanized by the actions of Onecoin. A wide array of publications, posts and tweets have railed against the maligned company and the community has raised over $8500 for the German bloggers’ defense. After noticing the response from the cryptocurrency community Jen McAdam was extremely grateful, writing that “there are people whose lives are being ruined and by putting articles out there that expose the truth, it is literally saving lives”.
Financial Regulators Joining In
It may just be a tipping point in the fight against this particularly well funded company. A united crypto community may have the sway to turn public opinion against Onecoin by getting the message out to fledgling communities in the countries that Onecoin seems to be targeting — India, Pakistan, plus sections of the UK, Russia and China.
Already, AlHuda CIBE has rescinded the Sharia Certificate from the Onecoin ‘CoinSafe’ product. Thailand’s financial regulator has called Onecoin a “gang of criminals”, and investigations remain ongoing in Italy, Germany, Norway and China.
For his part, Bjorn Bjercke remains tightlipped, but cryptically said that the “truth is leaking”.
With the events of this week, it seems we will find out sooner rather than later.
Can you predict what will happen next? Let us know in the comments.
Images via Pixabay, Wikipedia